EU – Baltic States, Financial Services, Latvia, Legislation

Tomorrow, the Finance Ministry will submit for review by the government amendments to the plan of action for implementing the Latvian economic stabilization and growth recovery plan, informs LETA.

The amendments have been drawn up in order to put into practice the fiscal, financial and structural reforms outlined in the Latvian government's letter of intent to the IMF and the memorandum of understanding signed with the European Communities. The latest amendments stipulate which institutions carry full or partial responsibility for introducing the reforms, as well as set deadlines for reporting on the process of implementing the plan.

In the letter of intent, the government of Latvia undertakes that a number of measures will be introduced to reduced the state 2010 budget deficit. Latvian government has closely collaborated with the social partners in preparing and evaluating the respective measures.

In 2010, the state budget deficit is planned to be curbed to be no higher than 8.5% of the gross domestic product (GDP). For this Latvia has committed to reduce its budget spending next year by another LVL 500 million or 4% of the GDP.

In case this goal is not met, the government has resolved to introduce the progressive personal income tax as of January 1, 2010, as well as raise the value added tax rate to 23%.

As reported, last week almost EUR 200 million has been transferred by the International Monetary Fund (IMF) to the State Treasury as the second part of the IMF's loan to Latvia.

Full letter of intent can be read here.